Billionaire James Packer has sold almost half of his stake in casino giant Crown Resorts for $1.76 billion in a deal that is set to spark questions about whether it complies with the conditions of a licence with the NSW government.

Mr Packer's private investment vehicle on Thursday night saidit had sold about half its shares in Crown to the Hong Kong-based Melco Resorts & Entertainment, which runs venues in Macau and once had a joint-venture casino with Crown in the hugely popular Chinese gambling hub.

James Packer at the opening ceremony of Crown Macau in 2007. Credit:AP

Melco, which is purchasing the shares from Mr Packer's private investment company Consolidated Press Holdings, is run by Lawrence Ho, son of the gambling tycoon Stanley Ho, who once enjoyed a monopoly on gambling in Macau.

Mr Ho said the two companies shared similar DNA and expressed confidence in Crown's Barangaroo development in Sydney.

"Crown's resorts in Perth and Melbourne are world class entertainment destinations and I believe that Crown Sydney, much like Melco's Morpheus property, will create an architectural icon for the city, the country and the world," Mr Ho said.

On Wall Street, Melco shares dropped on the announcement and finished 5.6 per cent lower.

Melco said it intended to pursue representation on Crown's board once it obtains approval from gaming regulatory authorities across Australia.

The company also signalled it would be willing to increase its stake in Crown.

Loading

"Additionally, subject to obtaining requisite regulatory approvals, Melco welcomes the opportunity to increase its ownership in Crown," Melco said in a statement to the Nasdaq stock exchange.

That included a clause saying: "Crown will ensure that it prevents... Stanley Huang Sun Ho or a Stanley Ho Associate from acquiring any direct, indirect or beneficial interest in Crown, a subsidiary of Crown."

The agreement also bans any material deals between Crown and Stanley Ho or his associates and precludes Stanley Ho from holding certain roles with Crown.

Stanley Ho has faced allegations of links to organised crime which have long troubled gambling regulators in other jurisdictions. He has denied those allegations.

Packer vows to stay on

Mr Packer, who had held a 46 per cent stake in Crown, said the company would remain a massive part of his life.

"My continuing Crown shareholding represents my single largest investment," Mr Packer said in a statement released late on Thursday night.

"I am still vitally interested in Crown’s success as a world class resort and gaming business."

The sale of about 20 per cent of Mr Packer's shares leaves him with about a quarter of the company, worth about $2.3 billion. Sources close to Mr Packer said he would use the money from the sell-off to diversify his investment interests outside of the gambling sector, but would not be "rushing in" to do so.

Sources close to the Crown board on Thursday night said they had not been aware of Mr Packer's plan to sell shares to Melco, however, they were not surprised, given his consideration of a sale to Wynn.

"We knew Packer had put Crown in play when Wynn came knocking," one insider said.

"But I'm not sure that this means he is going to sell out altogether ... and I don't think he will."

Loading

Crown insiders on Thursday night suggested Mr Packer's sale to Melco would be a "positive for Crown".

"We know them very well and they've always been a terrific partner," one said.

The sale is considered especially beneficial to Crown due to Melco's knowledge of the lucrative high-roller market of wealthy Chinese punters, who have become an ever-important source of revenue to the global casino industry.

Since a Chinese government crackdown and the high-profile arrests of 19 Crown staff for illegally promoting gambling on mainland China, where gambling is illegal, casino moguls around the world have been beset by uncertainty about the fortunes of their international high-roller programs.

Chinese gamblers, who often play baccarat, can turn over hundreds of thousands of dollars a hand, and millions of dollars an hour.

"Given their [Melco's] deep knowledge of Asian gaming and VIP programs ... if you're a Crown shareholder, you'd be thinking this was a positive," a source close to Mr Packer said.

The sale of Mr Packer’s shares comes at a critical time for the ASX-listed Crown Resorts, which is in the process of building a multibillion-dollar casino and hotel complex in Sydney's Barangaroo, due for completion in 2021.

Those who know Mr Packer say the billionaire had been "disengaged" from the Crown business for some time and had made it known to international casino operators that he was prepared to sell his stake.

He definitely wants and easier life, and a less-stress life. No doubt about that.

Colleague of James Packer

Mr Packer has privately expressed a desire to seek a "lower-profile" life, especially in the wake of his shock decision to step down from Crown's board in 2018 citing the need to deal with mental health issues. Days after departing the board, he checked into a psychiatric hospital in Boston.